Essay about Science Technology Company

653 Words Apr 23rd, 2014 3 Pages
Science Technology Company 1985 President: Bill Watson
CFO: Harry Finson Questions:
1. Are the 5-year forecasts useful, given uneven growth in sales, inventories and receivables, and earnings in the past?
2. What will be the impact of a resurgence of inflation, fueled by massive budget deficits, on STC?
3. Can the company finance the rapid sales growth that is anticipated? STC
• Leading manufacturer of automated test equipment (ATE)
• 31% market share on testers for printed circuit boards
• Second largest in semiconductor test operation
• Objective: To be the recognized international leader in providing integrated quality management systems to manufacturers of electronic devices and equipment.
• Strategies: o Heavy
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Large customer base
2. Extensive software
3. A broad line of testers
4. A dominant share of printed circuit board test market
5. A fair position in VLSI testing
6. Two developments:
a. Solved quality problems on an in-circuit tester that is expected to be a mainstay product
b. A high performance new tester that will be a breakthrough in test technology by mid-1986
7. A major program with US Department of Defense
Reviewing Financial Pressures
• Financial base for planned growth: 3.45 million shares of common stock in 1982 and 1983 that raised $66 million
• Financial strength in 1985 matched competitors’
• 2 concerns of Mr. Watson:
1. Past difficulties in forecasting
2. Very substantial increase in debt
• Permanent new capital requirements depend almost entirely on: o Sales growth o Retained profits o Efficiency of corporate assets employed
• Absence of cash dividends allowed STC to avoid excessive debt…

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